Mine operator Coeur Alaska Inc. had records of water-quality violations dating back to March 2007, but didn't inform a federal agency, the U.S. Forest Service, until December of last year.

The state agency charged with protecting water quality, the Department of Environmental Conservation, found out about it in April when inspectors on a routine trip noticed orange water while flying over the mine. The color is a common indicator of acid drainage.

Certain kinds of rock generate acid when they're exposed to air or water through the natural process of oxidation. Disturbing those rocks by blasting or grinding them can greatly speed up the process by exposing more rock surface to air. High-acid water picks up metals that harm fish and other wildlife.

The company "immediately retained third-party experts in geology" as soon as it noticed the drainage, according to spokesman Tony Ebersole. He declined to say when that happened.

The Forest Service approved Coeur's plan earlier this year to keep the offending material from being exposed to air and water. Buffering the rock and capping it diminished but didn't stop the flow of acidic water into a pond near Lower Slate Lake. The acid is draining into an excavation pond connected to Lower Slate Creek.

The Forest Service consulted with DEC after the plan was approved.

"We're the mine permit administrators, and any changes in the permit operation go through us. So that's the way we handled it," said Pete Griffin, Juneau district ranger for the Forest Service.

Coeur said its "aggressive" plan was effective.

"Water quality monitoring in the area demonstrates the success of these efforts in improving the water quality in Slate Creek," wrote Ebersole in an e-mail.

After examining the company's water monitoring reports, DEC issued a notice of violation to the company on Aug. 26 for violating water quality standards for manganese, zinc, aluminum and cadmium. The notice requires Coeur to stop the flow and submit regular water-quality reports.

The acid is from rock that was excavated while Coeur was building a dam at Lower Slate Lake, and is not from waste rock associated with the mine's ore.

Acid-generating rock is common in Southeast and near hard-rock mines. Yet this is the first time acid drainage has been found at Kensington, where the ore and nearby rock have components that can neutralize the effects of acid.

The drainage is near where Coeur now intends to dump its tailings, if it can persuade the U.S. Supreme Court to reverse the 9th Circuit Court of Appeal's cancellation of its permits. They were canceled after the Southeast Alaska Conservation Council, the Juneau Group of the Sierra Club and Lynn Canal Conservation successfully argued that the permit violated the Clean Water Act.

Oral arguments are not scheduled yet but are expected in early 2009.

The mine had never stopped appealing its Lower Slate Lake tailings plan. But in the last year and a half, Coeur has been working on an alternative plan that the environmental groups approved. That plan was to remove water from tailings and deposit them as a paste on Comet Beach, above Lynn Canal and away from Berners Bay.

The company pulled out of that plan last week, and announced it was pursuing the Lower Slate Lake plan alone. The mine's production has been delayed until late next year, if the company is successful in court.

News of acid drainage raises new concerns about the effect storing tailings there could have, said Rob Cadmus, mining organizer for SEACC.

"It also makes us wonder how thoroughly Coeur's looked at other areas for acid mine drainage. I consider this a very, very serious thing," he said.

If the Supreme Court restores Coeur's permits for Slate Lake, the company will have to characterize the extent of the acid-generating rock and control it before going ahead with work, said Crafford at DNR.

Mark Rorick, president of the Juneau Group of the Sierra Club, said he worries the Slate Lake dam is ill-designed for a major earthquake, and the acid drainage could end up in Berners Bay. The paste tailings alternative, he said, is much more stable.

Rorick and Cadmus were also troubled by the lack of communication from Coeur, after the company had pledged to share information with the groups and resolve differences.

"They didn't tell us about it, they didn't tell DEC about it," said Cadmus. "They hid it from the agency that most would have helped them figure it out."

Over the last year, Coeur has touted its talks with the environmental groups.

They're partly how the groups came to approve the paste tailings plan. The groups were also discussing a reclamation plan for Lower Slate Lake, whose banks were cleared to make way for the dam.

But they were talking about silt and trees, Cadmus said, when they should have been talking about acid.

In a letter to the state, Coeur wrote that the acid drainage wouldn't have happened if construction hadn't been halted by the 9th Circuit Court.

The state replied that it hadn't seen evidence of that assertion. Monday, Ebersole declined to say why finishing construction there would have stopped the acid drainage.

The Kensington Mine is 45 miles north-northwest of Juneau. Coeur Alaska is owned by Idaho-based Coeur d'Alene Mines Corp.